Global capital markets trended sideways, apart from a dip on Thursday, following the news of global manufacturing expansion. The markets remained generally balanced, after news of falling inflation in the UK and solid corporate earnings reports. The news of global expansion in manufacturing has led to further speculation that the elevated interest rates are doing little to slow down an expanding global economy and concerns remain about any chance of a soft landing when economic activity does begin to slow down eventually. In terms of securities, NVIDIA was the market MVP this week with unexpected profits pushing stock value past the $1,000 benchmark. While Citibank was pulled up and fined by British regulators for its part in the mega market crash in 2022, the U.S. Securities and Exchange Commission approved the public access to the first ETF holding cryptocurrency. The U.S. Dollar appreciated during the week, owing to better economic performance indicators. Finally, in geopolitics, it is rumored that Vladimir Putin is ready to discuss terms of a ceasefire in Ukraine, while aid to affected areas in Palestine continue to meet blockages as the fighting in the city of Rafah has blocked major routes.

Global Updates
  • The MSCI All Country World Index was trending sideways, till it fell sharply on Thursday as the latest PMI data pointed to a global expansion in manufacturing. As a result, investors anticipate interest rate cuts to be delayed even further.
  • U.K. inflation fell to 2.3% in April, but remains higher than acceptable levels. Money markets lowered their expectations of rate cuts in June and raised expectations of rate cuts in September.
  • In a recent poll of Eurozone economists, inflation in the area is expected to have risen in the month of April. The European Central Bank will announce the official figure on May 31st and if it has indeed risen, rate cuts by the central bank could possibly be pushed back further. 
  • According to Russian sources, Russian President Vladimir Putin is ready to halt the war in Ukraine with a negotiated ceasefire that recognizes the current battlefield lines. However, the Kremlin is prepared to fight on, if Kyiv and the West do not respond. 
  • Japan’s 10-year government bond yield rose 1.6 basis points, crossing 1% for the first time in 11 years. The spike resulted from investor speculation that the Bank of Japan would raise rates from 0.1% to counter inflationary pressures and a weakening yen.
  • Citibank was fined $62 million by British regulators over ‘fat finger trading’ and control errors which caused the $444 billion crash in 2022.
U.S. Equity
  • The S&P 500 Index rose over the week overall, after a slight tumble on Thursday with the release of higher-than-expected manufacturing PMI data.
  • The Federal Open Market Committee (FOMC) released the minutes of its meeting held on April 30 – May 1 with members expressing uncertainty about the efficacy of rate cuts in lowering inflation.
  • Pfizer launched a multi-year cost reduction program to improve operational efficiency, network structure changes and product portfolios. First phase of operational efficiencies is geared to generate $1.5 billion savings by 2027.
  • NVIDIA announced a 10-for-1 stock split as its shares surged past $1,000 following larger than expected quarterly earnings of $26.04 billion and net income of $14.88 billion. 
  • Biogen acquired Human Immunology Biosciences (HI-Bio) for $1.15 billion to expand its immunology portfolio. 
  • DuPont promoted current CFO Lori Koch to CEO, effective from June 2024, as the company seeks to achieve capital allocation efficiency by splitting into three publicly traded companies. The spinoffs will focus on electronics, water and industrials. 
  • The SEC approved the first U.S. ETF holding cryptocurrency, Spot Ether ETFs, making trade in cryptocurrency accessible.
U.S. Fixed Income
  • The Bloomberg U.S. Aggregate Bond Index declined marginally this week. 
  • The U.S. 10-year Treasury yield marginally rose to 4.47% over the week and the yield on the 2-year note rose to 4.93%.
  • The U.S. Dollar Index marginally rose to 105.09 during the week as the dollar appreciated against the Euro and Yen.
  • Trading in China’s $5.5bn issue of 30-year sovereign bonds was suspended twice during the week, after frantic retail buying by domestic investors, with bond prices rising by as much as 20% in a single day.
Sources

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